Unlisted Equities

These include equity shares of a company that is not listed on BSE/NSE, these shares are traded over the counter (OTC), and they are often called OTC securities. These companies can be companies which are privately held, formerly public companies taken private in management buyouts, public companies which are not yet listed on a recognised stock exchange etc.

These companies often enjoy a healthy growth rate and have industry-leading future prospects. These unlisted shares, especially at pre-IPO stage, provide an excellent investment opportunity mainly focusing on long-term wealth creation. The returns can potentially beat returns by listed equities

The Characteristics of Unlisted Shares 

This category has its own market, where buyers and sellers transact through dealers. 

1. Dematerialized: Unlisted equities, like listed stocks, are transferred to your Demat account. The status of unlisted shares purchased through a depository participant account, in which they are available at face value, can be checked. 
2. Price Mechanism: Unlisted markets are a pure supply and demand game that puts an investor’s judgement to the test. As exchanges are not involved in this method, fair price discovery is constantly scrutinised. The price of a share is determined by mutual agreement between the dealer and the customer. 
3. Growth factor: Unlisted markets allow investors to purchase shares in companies that are either technologically or operationally novel. As a result, the cost is significantly lower than the advertised space. If you want to watch how a firm evolves over time, unlisted space is for you. 
4. Liquidity concerns: In unlisted marketplaces, liquidity concerns are common. Investors, on the other hand, seldom liquidate their stake in an unlisted market.